It is speculated that HTC and Verizon Wireless will be working on a software update for the HTC Droid Incredible to bring give the device some enhanced features not currently enabled by the software, which would bring the HTC device up to par with the soon to be released Verizon Wireless Motorola Droid X. Among the features that a software update would bring would be to enable the 720p HD video recording capabilities on the 8-megapixel camera as well as bringing support for an optional Mobile Hotspot App that would turn your Android smartphone into a wireless router for tethering.

The 720p HD video encoding would be extremely likely, considering some recent HTC-made devices are capable of such a feature but was not given that capability upon release. Among those devices are the HTC Desire and the Google Nexus One. Additionally, with the 8-megapixel still and HD video camera, the Droid Incredible would match the HTC EVO 4G‘s camera and video capabilities on rival carrier Sprint.

As to the mobile hotspot app, that would probably cost extra. Verizon Wireless announced that the app for the Droid X would be free, but the service would cost $20 extra per month for 2 GB of data traffic for tethering–smartphone data would still be unlimited on the $30 smartphone data plan.

The software update would definitely make it a lot harder for users to choose between the Droid X and the Droid Incredible. The main difference now for most users would be screen size and LCD versus AMOLED.